Traffic is worse than most‚ Internet speeds are slow but Cape Town is on world radar as a top Tech City

14 March 2017 - 21:09 By TMG Digital
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Cape Town aerial view. File photo.
Cape Town aerial view. File photo.
Image: Pam Golding Properties

Cape Town has just managed to scrape in on a ranking on the world's top 22 Tech Cities of 2017‚ becoming the only city in Africa to make the cut.

Ranked number 22 out of 22 in the report by global property giant‚ Savills‚ Cape Town‚ along with other emerging cities Santiago and Buenos Aires‚ is recognised as a major tech hub with potential as a rising global player.

The Savills Tech Cities report rates cities on metrics including whether they have thriving and growing tech industries‚ as well as homegrown start-ups and incubators‚ and which are at the top of global shopping lists for tech companies looking for space in which to locate.

Start-ups per 1‚000 people was measured at 0.1 for Cape Town compared with a tech cities average of 2.3.

Andrew Golding‚ CE of the Pam Golding Property group which is in association with Savills‚ cited the City of Cape Town’s focus on hi-tech advancements with a hi-speed internet programme currently being rolled out in the Western Province as a positive factor.


Graphic: Savills World Research

The tech environment‚ assessing digital infrastructure‚ broadband networks and consumer engagement‚ measured broadband download speed (MBPS) for Cape Town at 2.4 versus the tech cities average of 19.4.

The cities highlighted in the report were also assessed for factors such as "buzz and wellness" which includes health of the urban environment‚ quality of parks‚ crime rates‚ healthcare‚ pay equality and commuting times‚ while "city buzz" considers nightlife‚ entertainment and cultural offer. Notably Cape Town features 9th on the Savills ‘buzz and wellness’ index and second on the cost of living rank (excluding property costs).

"Good coffee's important in the tech world! The Flat White Index considers a city's café culture: in other words‚ how easy it is to get a decent brew and free WiFi for on-the go work and networking‚" the report stated.

It ranked the cost of a "flat white" at $1.78 in Cape Town‚ compared with $3.23 for the Tech Cities Average.

Under the wellness category‚ measured on tech commute - average commute by employees working in key tech districts‚ Cape Town scored worse than the average - at 35 minutes versus the average of 32 minutes.


Graphic: Savills World Research

The final component of the report took into account property costs such as the cost of renting commercial property for a ‘scale-up’ and established tech company‚ and the cost of renting residential property for employees. Golding commented: “Cape Town’s central city has attracted huge investment in regard to residential‚ mixed-use and commercial property investments and successfully evolved into a leading and trendy ‘live‚ work‚ play’ destination.”

Established tech firm office rent per square foot for Cape Town was priced at US $13 versus a tech cities average of $53.

Top-rated in the Savills report was the USA’s Austin as the world’s foremost tech city‚ offering the infrastructure‚ business environment‚ talent pool and lifestyle to make it a strong base for tech companies.

Two other United States cities – San Francisco and New York – were ranked 2nd and 3rd respectively‚ followed by London in 4th position. Access to venture capital and talent give US cities a lead over other global centres‚ says Savills‚ but Austin beats San Francisco to the top of the table because it has lower real estate costs and is so successful in attracting tech talent.

However‚ while US cities dominate the top of the Tech Cities rankings‚ the rest of the top 10 consists largely of "liveable" cities as Amsterdam‚ Copenhagen and Toronto‚ which appear above traditional established global tech rivals such as Hong Kong and Singapore.

This is due to the strong performance of these cities in terms of "buzz and wellness"‚ said Savills‚ with the firm noting these as factors that are likely to prove increasingly important to the tech industry in attracting future talent. On this basis‚ Berlin‚ London and Tokyo are the highest ranking. Berlin is the only city which appears in the top five cities for all three metrics (‘buzz’‚ ‘wellness’ and cost of living) and ranks 1st. London and Tokyo‚ despite having lower wellness scores‚ are global metropolises and therefore are boosted by their ‘buzz’.

Amsterdam is ranked 4th and Toronto 5th‚ after scoring highly in both "wellness" and "buzz" while remaining affordable locations to live.

Copenhagen is ranked 11th in the index due to its high living costs‚ but is notable for being the world’s foremost tech city in terms of "wellness" and is therefore one to watch‚ said Savills.

Nicky Wightman‚ director‚ Savills Worldwide Occupier Services‚ commented: “Cities attract young tech talent who increasingly want to live in dynamic‚ healthy neighbourhoods within walking or cycling distance of the office. For the first time we’ve therefore looked to specifically identify the cities that deliver what this demographic desires. While there’s often a trade-off between ‘buzz’ and ‘wellness’‚ Amsterdam and Toronto balance the two. Copenhagen‚ meanwhile‚ may not currently offer the breadth of nightlife and entertainment as larger cities‚ but with the next generation of talent increasingly making decisions based on the potential impact on their physical and mental wellbeing‚ it may well see its global appeal grow. Occupiers looking to attract such talent therefore need to pay close attention to such factors when looking for new locations.”

Accommodation costs (the cost of renting residential and office space per employee‚ per annum) stand at US$39‚700 in Amsterdam‚ US$35‚800 in Toronto‚ and US$33‚500 in Copenhagen – half that of London‚ New York or San Francisco‚ where the same costs exceed US$65‚000 per year.

Paul Tostevin‚ associate director‚ Savills World Research‚ noted: “Smaller cities tend to fare well as ‘healthy’ cities‚ whilst crowded megalopolises such as London‚ New York and Tokyo offer a rich variety of retail‚ nightlife and cultural experiences which will always be attractive to some workers. But in the middle there are cities such as Amsterdam‚ Toronto and Berlin which score well on both. These cities tend to mean shorter commutes‚ easier access to amenities and a better work/life balance‚ and we suspect they may move up the rankings as they drive the economy in a digital age.”

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